VietJetAir aims to break even in three years

Reported by Binh Nguyen

Tuesday, Apr 24,2012,21:14 (GMT+7)

VietJetAir aims to break even in three years

Pritam Singh

Local airlines are facing fierce competition, but VietJetAir’s deputy general director Pritam Singh assures competition is in every business, not just in aviation industry, and this is good for end-users. Singh told the Daily that VietJetAir still keeps attached to flight expansion to further explore the potential of Vietnam’s aviation market and what this carrier will do to make this plan a reality. Excerpts:

The Saigon Times Daily: VietJetAir has announced an ambitious plan to expand domestically and regionally. What’s the viability of this plan in the current tough time?

Pritam Singh: We are confident that VietJetAir’s direct connection serving Danang and Nha Trang, and our many more domestic and international destinations in the coming time will be able to meet increasing air travel demand and stimulate new travel demand, especially that of young adults, businesspeople and tourists. Besides the current HCMC-Hanoi route, VietJetAir will launch new services between HCMC and Danang on April 27 and between Hanoi and Nha Trang on May 19. The former will have two flights a day and the latter will offer one daily flight per day. We will also increase flight frequency of the HCMC-Hanoi route to eight return flights per day on April 27 from the current three.

We now also consider launching the HCMC-Haiphong route and flights to other destinations in Vietnam and Asia by the end of 2012. Flights to North Asia and Southeast Asia will be our priorities for international services then with specific routes to be announced following our future market research.

Local airlines have struggled with losses on domestic routes and VietJetAir is not an exception. How could a newcomer like VietJetAir sustain operation, especially under the impact of volatile fuel prices?

- The global economy has been enduring an economic slowdown since 2008. Though Vietnam and neighboring countries have felt the slowdown impact in some ways, these countries have not been much affected by the crisis so far. VietJetAir officially entered Vietnam’s aviation market in late 2011 with one service between HCMC and Hanoi, and I think this is the right time for us to start the business and to get well prepared for coming market boom in the wake of the global economic recovery. If we wait for the market to clearly get better, the competition will be tougher for us to get started. Also, I think even in hard times, we need to help speed up the domestic economy’s growth because we will all benefit from this growth.

You used to say that VietJetAir’s fares can compete with those of trains and even coaches. So, when will VietJetAir be able to break even?

- We are on the right track to control cost and aim to be well financed and even break even in the next three years. How? Our aircraft are new - on average three-years-old - which makes them easy to maintain. This allows us to save cost and ensure punctual flights. We keep airfares low by not providing any form of meals or drinks on board. We try to maximize the use of each aircraft. Safety permitting, we try to fly 360 hours a month rather than 230 to 250 hours. And we have 180 seats onboard our A320s rather than 150 seats. For us, it’s all about volume and to do this we have to be very cost-efficient. We cannot have too much fat in the system.

According to the International Air Transport Association (IATA), the future for Vietnamese aviation is bright. By 2014, Vietnam is projected to be the world’s third fastest growing market for international passengers and freight, and the second fastest for domestic passengers. This also means that the opportunities for low-cost carriers are huge in the coming time.

Do you mind sharing your knowledge of airline passenger numbers in Malaysia, Thailand and other countries you know, and how have these countries developed their aviation markets and fuel air travel demand?

- On average about 10% of the population tend to travel by air annually, for work, meetings, visiting relatives or leisure. Low-cost carriers (LCC) have now emerged in all these countries to offer less expensive travel and with the publicity it has ignited the demand for travel on LCC.

Has VietJetAir made any change to the LCC business model successful in other markets so that it is viable in Vietnam to help VietJetAir transport 700,000 passengers in the first year and expand its aircraft fleet to 15 by 2015 as the carrier announced?

- We need to be very lean and mean. We maximize the utilization of the aircraft while providing on time flights, good in-flight services, and seamless travel for our passengers at low fares. We also have to be very creative in providing services and serving passengers. And we are on track.

What are the challenges for airlines in Vietnam when both situations in and outside this country are taken into consideration, particularly the failure of Indochina Airlines only one year after it took off?

- We cannot comment on present or past airlines, but we have definitely learned from their mistakes and strengthen on those areas. There are still many challenges facing airlines such as increasing inflation in Vietnam, rising fuel costs, local currency instability, low income of Vietnamese and flat foreign and domestic investment.